RBT Case Studies


Case Studies for Elective RBT

  • Bob and Lisa are a couple with two children. Bob is employed by a Fortune 500 company. He is sent to work in Toronto on a three year assignment. Bob and Lisa decide to continue to be taxed as U.S. residents during the period of their Toronto assignment and then they return to the U.S.

  • Latisha is a college student who goes on a study abroad program in Mexico. She falls in love and decides to stay in Mexico with her partner who she eventually marries. A few years later, she has put down roots in Mexico and realizes that the cost and complexity of filing U.S. taxes are high: The cost of filing her taxes consistently exceeds the taxes that she owes the U.S. Her local bank in Mexico has restricted the kinds of accounts that she can hold because of her U.S. citizenship. She has also become aware that as a U.S. tax resident living in Mexico she has difficulties saving for retirement. Her assets are primarily located in Mexico. She elects to transition to Non-Resident status.

  • Audrey was born in Australia to an Australian father and an American mother. She has never lived in the United States and has no U.S. assets. She is deemed to have been a Non-Resident from birth. As an “Accidental American,” she does not owe departure tax.

  • Peter was born in Germany as a German citizen. He moved to the United States as a young adult, and became a successful businessman, who naturalized as a U.S. citizen.  He owns substantial financial assets in the U.S., including a rental property in California. Peter’s parents are getting older, and he decides to move back to Germany to take care of them. He does not expect to return to the United States, so he needs to make a decision about whether to terminate his tax residency by paying the departure tax. He would have to pay tax on the capital gains estimated from a deemed-sale analysis on all of his non-property financial assets located in the U.S. Although the cost of the departure tax would be high enough to require him to sell some of his financial assets to cover it, he decides to complete the procedure to be deemed a U.S. Non-Resident  so that he can invest in German assets without being under conflicting tax systems resulting in double taxation, and will avoid the high cost of completing a tax return from outside the U.S. He is also concerned about potential difficulties with investing in a non-U.S. pension. Following the payment of the exit tax, he is taxed as a Non-Resident with withholding on any income from his U.S. securities investments and California real estate. 

  • Tom and Mary are middle-class Americans from Cincinnati. They retire at age 65 and decide to spend the early years of their retirement living in France. Most of their assets remain in the U.S. They have found a French bank that is willing to let them open an account. (Their banking and investment needs are relatively simple, given that their investments are primarily based in the U.S.) They decide to remain in the U.S. tax system since most of their income is from Social Security. They will have to file an FBAR form for their local French bank account, but will not be subject to FATCA given their U.S.-centric investments.